Finance and Economics Discussion Series (FEDS)

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May 2018

Reconsidering the Consequences of Worker Displacements: Firm versus Worker Perspective

Aaron Flaaen, Matthew D. Shapiro, and Isaac Sorkin

Abstract:

Prior literature has established that displaced workers suffer persistent earnings losses by following workers in administrative data after mass layoffs. This literature assumes that these are involuntary separations owing to economic distress. This paper examines this assumption by matching survey data on worker-supplied reasons for separations with administrative data. Workers exhibit substantially different earnings dynamics in mass layoffs depending on the reason for separation. Using a new methodology to account for the increased separation rates across all survey responses during a mass layoff, the paper finds earnings loss estimates that are surprisingly close to those using only administrative data.
Accessible materials (.zip)

Keywords: Earnings Losses, Job Loss, Unemployment

DOI: https://doi.org/10.17016/FEDS.2018.029

PDF: Full Paper

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Last Update: January 09, 2020